Real Estate Investments (Tables)

6 Months Ended

Jun. 30, 2016

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table presents the allocation of the fair values of the assets acquired and liabilities assumed during the periods presented (in thousands):



	Six Months Ended June 30,
	2016		2015
Real estate investments, at cost:
Land	$	4,215	$	4,183
Buildings, fixtures and improvements	14,555		5,249
Total tangible assets	18,770		9,432
Acquired intangible assets:
In-place leases	1,182		715
Above-market leases	—		168
Assumed intangible liabilities:
Below-market leases	—		(108		)
Total purchase price of assets acquired	$	19,952	$	10,207

Schedule of Future Minimum Operating Lease Base Rent Payments

The following table presents future minimum base rent payments due to the Company over the next five years and thereafter. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items (in thousands):



	Future Minimum Operating Lease Base Rent Payments		Future Minimum Direct Financing Lease Payments ⁽¹⁾
July 1, 2016 - December 31, 2016	$	567,227	$	2,119
2017	1,144,030		3,932
2018	1,119,467		3,016
2019	1,079,266		2,397
2020	1,040,706		2,023
Thereafter	7,743,616		5,893
Total	$	12,694,312	$	19,380

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(1)	34 properties are subject to direct financing leases and, therefore, revenue is recognized as direct financing lease income on the discounted cash flows of the lease payments. Amounts reflected are the minimum base rental cash payments due to the Company under the lease agreements on these respective properties.

The following table reflects the minimum base rent payments due from the Company over the next five years and thereafter for certain ground lease obligations, which are substantially reimbursable by our tenants, and office lease obligations (in thousands):



	Future Minimum Base Rent Payments
	Ground Leases		Office Leases
July 1, 2016 - December 31, 2016	$	7,145	$	2,482
2017	14,820		4,602
2018	14,410		4,704
2019	14,139		4,769
2020	13,386		4,798
Thereafter	224,648		14,089
Total	$	288,548	$	35,444

Schedule of Future Minimum Direct Financing Lease Payments

These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items (in thousands):



	Future Minimum Operating Lease Base Rent Payments		Future Minimum Direct Financing Lease Payments ⁽¹⁾
July 1, 2016 - December 31, 2016	$	567,227	$	2,119
2017	1,144,030		3,932
2018	1,119,467		3,016
2019	1,079,266		2,397
2020	1,040,706		2,023
Thereafter	7,743,616		5,893
Total	$	12,694,312	$	19,380

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(1)	34 properties are subject to direct financing leases and, therefore, revenue is recognized as direct financing lease income on the discounted cash flows of the lease payments. Amounts reflected are the minimum base rental cash payments due to the Company under the lease agreements on these respective properties.

Schedule of Capital Leased Assets

The components of the Company’s net investment in direct financing leases as of June 30, 2016 and December 31, 2015 are as follows (in thousands):



	June 30, 2016			December 31, 2015
Future minimum lease payments receivable	$	19,380		$	21,993
Unguaranteed residual value of property	29,877			31,562
Unearned income	(6,102		)	(7,243		)
Net investment in direct financing leases	$	43,155		$	46,312

Schedule of Future Construction Commitments

Below is a summary of the construction commitments as of June 30, 2016 (dollar amounts in thousands):



Development projects in progress	2

Investment to date	$	3,581
Estimated cost to complete ⁽¹⁾	1,937
Total Investment ⁽²⁾	$	5,518

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(1)	The Company is contractually committed to fund a developer $0.8 million to complete the remaining build-to-suit development project.


(2)	Excludes tenant improvement costs incurred in accordance with existing leases. As of June 30, 2016, $7.1 million of tenant improvement costs were included in buildings, fixtures and improvements in the consolidated financial statements.

Summary of Unconsolidated Joint Ventures

The following is a summary of the Company’s percentage ownership and carrying amount related to each of the unconsolidated joint ventures as of June 30, 2016 (dollar amounts in thousands):



Name of Joint Venture	Partner	Ownership % ⁽¹⁾	Carrying Amount of Investment ⁽²⁾
Cole/Mosaic JV South Elgin IL, LLC	Affiliate of Mosaic Properties and Development, LLC	50%	$	6,283
Cole/Faison JV Bethlehem GA, LLC	Faison-Winder Investors, LLC	90%	12,448
			$	18,731

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(1)

The Company’s ownership interest in this table reflects its legal ownership interest. Legal ownership may, at times, not equal the Company’s economic interest in the listed properties because of various provisions in certain joint venture agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. As a result, the Company’s actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interests.

(2)

The total carrying amount of the investments is greater than the underlying equity in net assets by $6.6 million. This difference relates to a purchase price allocation of goodwill and a step up in fair value of the investment assets acquired in connection with the Cole Merger. The step up in fair value was allocated to the individual investment assets and is being amortized in accordance with the Company’s depreciation policy.